Evening Report (VIP) -- October 26, 2012

GDP EXPANDS, BUT STILL SLUGGISH... U.S. gross domestic product (GDP) grew at an annual rate of 2% in the third quarter -- just above expectations and up from 1.3% growth in the second quarter. Consumer spending accounted for most of the increase in GDP along with a pickup in government spending. While GDP is expanding, the growth rate is still lackluster. Weak business sentiment continues to hold back growth as companies are hesitant to spend amid the "fiscal cliff" uncertainties.

POST-ELECTION PROSPECTS... A lack of leadership on all levels in Washington means the U.S. faces major decisions in the months and years ahead. While the two presidential candidates have duked it out on almost every topic, their focus for the next four years hasn't been very clear and the election itself is still too close to call. Washington consultant Jim Wiesemeyer provided the following "what if" scenarios on both candidates:

What if Obama wins? If President Barack Obama wins, he wouldn't have to face voters again and the true Obama would come out -- whoever that is. Some wonder if a Chicago-style politician can really change. Will Obama be able to work with Republicans and accomplish things, unlike the last four years? Or will he use any reelection as a "mandate" to govern and be even more prone to use executive orders on key policy moves he is unable to get through Congress? Regarding the latter question, there is concern about whether Obama would push an end-around to climate change policy or push through/implement aggressive Environmental Protection Agency (EPA) regulations that he backed off on ahead of the election. On the foreign policy front, some wonder if Obama will be more accommodative to Russia and Iran. Ag stakeholders question if a second term would see a return of the less-production agriculture focus of his first years as president or if Obama will continue his current, more-balanced approach. Uncertainty also exists as to Obama's ag secretary. Tom Vilsack, the current Secretary, has been high-profile and the administration has put him front and center at events such as the Democratic National Convention. If he exits, candidates include former Senate Ag Committee Chairwoman Blanche Lincoln (D-Ark.) or retiring Senate Budget Committee Chairman Kent Conrad (D-N.D.). Lincoln worked well with Republicans while chairing the panel and would keep southerners well represented. Conrad would bring a more populist feel to USDA but he may be frustrated by the bureaucracy.

What if Romney wins? If GOP challenger Mitt Romney wins the White House, people question whether the country would see the more-moderate Romney of late or the more-conservative version of the GOP primaries. Regardless, he would face the challenges of controlling arch conservatives in his own party. Plus, can he reach across the aisle to work with Democrats as he did as governor of Massachusetts with an 87% Democrat legislature? Will he hold true to campaign promises such as giving states more flexibility on the controversial health care reform law or halting existing regulations that negatively impact business while pursuing a true costs-and-benefits approach to new regs? After the latest debate, some question if he will bring any major differences in the tone of foreign policy compared to Obama. Regarding ag, stakeholders question whether he would take a more balanced approach than the current administration. Romney's ag secretary selection could be telling because personnel drives policy. Florida Ag Commissioner Adam Putnam, who cochairs Romney's ag advisory committee with Sen. Mike Johanns (R-Neb.), would be the front runner for ag secretary. Putnam has served five terms representing Florida, sat on the House Ag Committee and was elected chairman of the House Republican Conference for the 110th Congress. He's viewed as an excellent spokesman and could be one of the most articulate to occupy USDA in decades, though his Florida roots may raise suspicion with Midwesterners and others. Chuck Conner, president and CEO of the National Council of Farmer Cooperatives and a former Deputy Secretary of Agriculture under George W. Bush, is another possibility. He also sits on Romney's advisory committee and brings strong ag roots and Washington experience.

CONGRESSIONAL BATTLES LOOM... Most expect Republicans to keep control of the House, but their likely fewer seats could tone down the conservative platform. In the Senate, it is probable whatever party wins the chamber will not have true "control." Indeed, it could even be a 50-50 split with the vice president of the party that captures the White House breaking ties. Many issues need to be resolved in the near future, including

The fiscal cliff. This includes expiring tax cuts, the payroll tax holiday, the Alternative Minimum Tax, the estate tax, an annual budget deficit that is far too high relative to the U.S. economy and, above-all, the over $16 trillion in government debt.

Energy policy. If Obama wins, the status quo seems likely, with a bias towards alternative energy. If Romney wins, there could be a pronounced move freeing the oil and natural gas industries.

Farm bill. Its completion timeline in Congress is highly uncertain, as is implementation by this or a new administration.

U.S. Supreme Court nominees. The next president could nominate from one to three candidates. That could well determine the Court's "tone" for a long time.

Federal Reserve. Ben Bernanke's term as chairman expires January 2014. He has privately signaled he doesn't want another round at the helm. If Romney wins, Bernanke won't be chairman that long.

The key message is to vote. Tune out biased reporting and do your own analysis. Our fervent hope for the next president is that he is a leader of all Americans, and not just president of a political party. The country needs that at this critical time in our history.